UAE VAT Rate Guide 2026 — Which Goods and Services Are Taxed?
UAE VAT at 5% applies to most goods and services but some are zero-rated or exempt. Here is the complete 2026 UAE VAT rate guide for free zone company owners.
In this guide:
UAE VAT Standard Rate: 5%
Applies to most goods and services in UAE including:
- Consulting and professional services to UAE clients
- Retail sales of consumer goods
- E-commerce sales to UAE consumers
- Advertising and marketing services
- IT services to UAE clients
- Restaurant and hospitality
- Entertainment and leisure
UAE VAT Zero Rate: 0%
Applies to (zero-rated means VAT is 0% but you must still account for it and you can recover input VAT):
- Exports of goods outside UAE: 0% VAT
- International transport services: 0% VAT
- Certain food items (basic foods): 0% VAT on some staple foods
- Medicines and medical equipment: 0% VAT
- Precious metals investment (gold, silver): 0% VAT
- First residential property sale: 0% VAT on first supply of residential buildings
UAE VAT Exempt: No VAT
Applies to (exempt means no VAT and you cannot recover input VAT on costs related to exempt supplies):
- Residential property rent
- Bare land supply
- Financial services (interest, insurance — partially exempt)
- Government services where no competitor exists
UAE VAT on Digital Services (Reverse Charge)
- UAE VAT-registered businesses that receive digital services from foreign providers: Must account for UAE VAT under reverse charge mechanism
- Example: UAE company paying Upwork fees, Google Ads, Microsoft Azure — reverse charge VAT applies if UAE company is VAT-registered
- Rate: 5% of the fee paid; self-account and report on UAE VAT return